85-000789 Dennis J. Schmidt vs. Department Of Insurance And Treasurer Status: Closed Recommended Order on Wednesday, October 23, 1985.

Summary: Applicant for limited surety agent cannot be denied licensure for having been convicted of a felony which was reversed and remanded on appeal.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DENNIS J. SCHMIDT, )

)

Petitioner, )

)

vs. ) CASE NO. 85-0789

)

DEPARTMENT OF INSURANCE )

AND TREASURER, )

)

Respondent. )

___________________________)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held on August 21,

1985, in Tallahassee, Florida, before the Division of

Administrative Hearings by its duly designated Hearing Officer,

Diane K. Kiesling.

APPEARANCES

For Petitioner: James C. Massie, Esquire

P. O. Box 10371

Tallahassee, Florida 32301

For Respondent: Richard W. Thornburg, Esquire

Department of Insurance

413-B Larson Building

Tallahassee, Florida 32301

Lealand McCharen, Esquire

413-B Larson Building

Tallahassee, Florida 32301

Dennis Silverman, Esquire

413-B Larson Building

Tallahassee, Florida 32301

ISSUE

The issue is whether Dennis J. Schmidt meets the

qualifications for licensure as a limited surety or bail

bondsman.

BACKGROUND

The Petitioner, Dennis J. Schmidt, presented the testimony

of Renee Phillips, John Shoemaker, Robert J. Schmidt, E. Jerry

Randolph, Steven T. Greene, Onez O'Neal, and John R. Stewart,

and had 25 exhibits admitted into evidence: Petitioner's

Exhibits 1-10, 12-16, 18-21, 22A-22E, 23-24. Respondent

Department of Insurance, called three witnesses, Richard

Cataldo, Robert diMarzo, and Timothy Bell, and had two exhibits

admitted into evidence, Respondent's Exhibits 2 and 4. There

was one joint exhibit: Joint Exhibit 1.

The parties submitted Proposed Findings of Fact and

Conclusions of Law. They have been considered and a ruling has

been made on each proposed finding of fact in the Appendix to

this Recommended Order.

Prior to the formal hearing, Petitioner had filed and

argued a Motion to Supress Illegally Obtained Evidence and, in

the Alternative, a Motion in Limine Based on Collateral Estoppel

grounded on the fact that the courts had previously determined

that some of Respondent's evidence and derivative evidence was

obtained from an illegal search and illegal electronic

surveillance. That motion was denied. Petitioner also filed and

argued a Motion to Suppress Certain Testimony and Exhibits based

on the fact that the white substance allegedly identified as

cocaine had been voluntarily destroyed by the State and, thus,

Petitioner was denied his right to independently examine the

substance. That motion was also denied.

Petitioner then verbally argued a motion to exclude certain

evidence as irrelevant and immaterial on the ground that the

substance of the State's case was criminal involvement on the

part of Petitioner, but that no court had found that a crime had

been committed by Petitioner and a state agency did not have the

authority to determine whether a crime had been committed.

Hence, Respondent agency could not now determine that Petitioner

had been involved in criminal activity. That motion was also

denied.

Respondent filed a Motion in Limine seeking to prevent the

admission into evidence of Petitioner's letters of

recommendation. That motion was denied with leave to raise it

again at the formal hearing.

FINDINGS OF FACT

1. The Petitioner, Dennis J. Schmidt, filed an application

for a Limited Surety's (Bail Bondsman's) License on July 10,

1984. After having requested and having received additional

information from Petitioner, the Department of Insurance issued

a Letter of Denial on February 4, 1985. That letter denied the

application essentially on the ground that at the time of the

application it did not affirmatively appear that Petitioner was

". . . a person of high character and approved integrity and

(had) not been convicted of or pleaded guilty or no contest to a

crime involving moral turpitude or to a felony." An additional

basis for denial was that Petitioner had "(d)emonstrated lack of

fitness or trustworthiness to engage in the bail bond business."

2. An Amended Letter of Denial was issued by the

Department on June 25, 1985 repeating the grounds listed in the

February 4, 1985 letter and adding that Petitioner had made a ".

. . (m)aterial misstatement, misrepresentation or fraud in . . .

attempting to obtain a license or permit." This additional

ground was based on the fact that Petitioner had answered "Not

Guilty" to a question on the application concerning the outcome

of a criminal charge when, in fact, the conviction on that

charge had been reversed and remanded on appeal and subsequently

dismissed by the trial court.

3. The Department further explained its denial of

Petitioner's application by stating:

The Department finds that the evidence of

repeated criminal involvement concerning the

same offense and the aforementioned false

and misleading statement demonstrates lack

of high character and approved integrity

which qualities are requisite to licensing

as a Limited Surety Agent. This conduct

demonstrates a lack of fitness or

trustworthiness to engage in the bail bond

business.

4. In his application, Petitioner stated that he had been

charged with a felony cited charges in Dallas County, Texas,

4/14/80 and stated he was "incarcerated at the time in Texas

while awaiting the outcome of the charges." Petitioner entered

on the application, where it requests "Nature of Charge and

Outcome," the entries "Possession of Cocaine" and "Not Guilty."

5. Petitioner also listed an arrest in Dade County,

Florida, and listed as nature of charge and outcome the entry:

"Trafficking in Cocaine, Sale and Delivery of Cocaine and

Possession with Intent to Distribute: All charges were Nolle

Pros."

6. On August 27, 1980, Petitioner was charged in Dade

County, Florida, with "Trafficking in Cocaine, Sale or Delivery

of Cocaine, and Possession with Intent to Distribute Cocaine."

Prior to trial, the Circuit Court in Dade County ordered the

suppression of certain evidence because of illegal electronic

surveillance and the Florida Third District Court of Appeal

affirmed that order on September 21, 1982. Subsequently, the

State Attorney nolle prossed the charges against Petitioner.

7. The arrest in Dade County arose out of a stop and

search which occurred on March 18, 1980. On that date, Richard

Cataldo, then a detective with the Dade County Public Safety

Department, stopped a vehicle containing two individuals, Glen

Harden and Dennis J. Schmidt. The stop was based on information

obtained by a wire-tap. In the back seat of the vehicle,

Cataldo found a briefcase containing a white powder which was

field tested positive for cocaine. Cataldo never saw Schmidt in

possession and control of the briefcase or the white powder. No

cocaine was directly linked to Schmidt.

8. Schmidt and Harden were not detained at the time of the

stop and search. Approximately five months later Schmidt was

arrested. Subsequently, the warrant authorizing the wire-tap

was invalidated: and the evidence obtained during the stop and

search was excluded as "fruit of the poisoned tree."

9. A second incident occurred on April 14, 1980 in Dallas

County, Texas, where Petitioner was indicted for "Possession of

Cocaine." Petitioner was subsequently tried and convicted of

that charge and was sentenced to 20 years in prison. The

conviction was reversed by the Court of Criminal Appeals of

Texas because of the finding that evidence had been obtained

through an illegal search pursuant to a defective warrant. The

cause was remanded back to the trial court for retrial, but the

appeals court explicitly refused to acquit Petitioner. At that

point the evidence was destroyed, the Texas District Attorney

moved to dismiss the case, and his motion was granted by the

trial court.

10. This arrest arose after Petitioner called for an

ambulance in Dalhardt, Texas. Timothy Bell was an Emergency

Medical Services supervisor for the City of Dalhardt, and

responded with an ambulance to Petitioner's call. The ambulance

transported Petitioner to a hospital. In the ambulance

Petitioner told Bell he had been using cocaine. Subsequently at

the hospital, in the presence of Bell, Petitioner told two

nurses and a physician that he had been using cocaine. Based on

these statements, a warrant was obtained to search Petitioner's

automobile. It was this warrant which was held to be defective.

11. Petitioner attached three sworn statements by reputable

endorsers to his application. According to these three and

David Kelley, Renee Phillips, John Shoemaker, Robert J. Schmidt,

R. Jerry Randolph and Steven T. Green, Petitioner is honest,

reliable, dependable, trustworthy, and a man of good character

and integrity. He enjoys a good reputation in the community.

These witnesses include persons who have known Petitioner for

the last several years and are familiar with his work and

reputation. Also submitted were three letters of recommendation

regarding Petitioner's character and reputation. These opinions

were unrebutted and it is found that Petitioner has

affirmatively shown that he is of high character and integrity.

12. The Department does not dispute that Petitioner meets

all of the qualifications for licensure except those stated in

the denial letters. The Department conducted its own

investigation of Petitioner and found nothing derogatory except

the two above-mentioned incidents.

CONCLUSIONS OF LAW

13. The Division of Administrative Hearings has

jurisdiction over the parties to and the subject matter of this

proceeding pursuant to Section 120.57(1), Florida Statutes

(1983).

14. The Department of Insurance has jurisdiction over the

regulation of Bail Bondsmen pursuant to Chapter 648, Florida

Statutes. The qualifications of one aspiring to be a Bail

Bondsman are contained in Section 648.34, Florida Statutes, and

in pertinent part are:

. . . .

(2) To qualify as a bail bondsman, it

must affirmatively appear at the time of

application and throughout the period of

licensure that:

(a) The applicant is a bona fide

resident of the state.

(b) The applicant is a bona fide

resident of the state.

(c) The place of business of the

applicant will be located in this state and

the applicant will be actively engaged in

the bail bond business and maintain a place

of business accessible to the public which

is open for reasonable business hours.

(d) the applicant has successfully

completed a basic certification course in

the criminal justice system, consisting of

not less than 80 hours, approved by the

board and has successfully completed within

2 years of the date of his application a

correspondence course for bail bondsmen

approved by the board.

(e) The applicant is vouched for and

recommended upon sworn statements filed with

the department by at least three reputable

citizens who are residents of the same

counties in which the applicant proposes to

engage in the bail bond business.

(f) The applicant is a person of high

character and approved integrity and has not

been convicted of or pleaded guilty or no

contest to a felony, a crime involving moral

turpitude, or a crime punishable by

imprisonment of 1 year or more under the law

of any state, territory, or country, whether

or not a judgment or conviction has been

entered.

. . . .

15. In addition to failure to meet the statutory

qualifications, an applicant for a license can be denied

approval based upon several provisions in Section 648.45,

Florida Statutes. Relying on Section 648.45; the Department

deemed that Petitioner's application should be denied because,

it was alleged, he demonstrated lack of fitness or

trustworthiness to engage in the bail bond business and because

of a material misstatement, misrepresentation or fraud in

attempting to obtain a license. Section 648.45(2)(b) and (e).

16. The Department conceded that Petitioner met all of the

statutory qualifications cited in Section 648.34, with the

exception of the provision that he affirmatively show that he is

a person of high character and approved integrity.

17. Petitioner met his burden of affirmatively showing

that he is of high character and approved integrity through the

favorable testimony of his character witnesses, the letters of

recommendation, and the three sworn statements on his

application indicating that Petitioner was of good moral

character and had a good business reputation.

18. At that point the burden shifted to the Department to

show that Petitioner did not possess the requisite high

character and approved integrity. The Department's own

investigation revealed no character flaws or criminal activity

on the part of Petitioner prior to 1980 or since 1980.

19. The only evidence presented by the Department

concerned the incidents in Dade County and in Texas. The

charges in Dade County were voluntarily dismissed by the State

Attorney prior to trial. In Texas, the conviction of Petitioner

was reversed by the appellate court and the trial court

subsequently dismissed the charges.

20. As legal justification for its denial of Petitioner's

license application, the Department may not use the provision in

Section 648.34(2) referring to the conviction of a felony or a

crime involving moral turpitude. In Dade County there never was

a conviction. In Texas there was a conviction but it was

reversed on appeal and the case was subsequently dismissed.

Although apparently never directly ruled upon in an

administrative context, it is clear that in the criminal law a

conviction does not become "final" until the judgment of the

lower court has been affirmed by the appellate court. Joyner v.

State , 30 So. 2d 304, 305 (Fla. 1947).

21. The effect of a reversal of conviction is to make the

original judgment a nullity and the remand for a new trial

leaves the case standing as if no judgment had been rendered.

Ex parte Livingston ; 156 So. 2d 612, 617 (Fla. 1934) State v.

Adjmi , 170 So. 2d 340, 342 (Fla. 3d DCA 1964). The word

"nullity" means "an act or proceeding in a cause which the

opposite party may treat as though it had not taken place, or

which has absolutely no legal force or effect." Black's Law

Dictionary , (Revised Fourth Edition, 1968). Further, it cannot

legally be known that an offense has been committed until there

is a conviction. Joyner, supra at 306.

22. The only remaining theory is that the Department

argues that Petitioner's conduct is evidence of his lack of high

character and integrity. That conduct must be specifically

proven at the administrative hearing and the Department cannot

rely on court records, particularly where the court proceedings

did not result in a conviction. Even a judgment of conviction

in a criminal prosecution cannot be given in evidence in a civil

action to establish the truth of the facts on which it is

rendered. State v. Dubose , 152 Fla. 304, 11 So .2d 477 (Fla.

1943) see Metropoliton Dade County v. Wilkey , 414 So. 2d 269

(Fla. 3d DCA 1982). Further, the indictments or informations

are merely accusatory pleadings and they also are not admissible

for the purpose of proving or disproving a fact. Wilkey , supra ;

see Hines vager Construction Co. 188 So. 2d 826 (Fla. 1st

DCA 1966).

23. At the hearing the only direct evidence of suspect

behavior in Florida was the detective's testimony that in 1980

Petitioner was a passenger in an automobile where there was a

closed briefcase on the back seat containing a substance alleged

to be cocaine. The detective also testified that he had not

specifically seen Mr. Schmidt in possession or control of any

cocaine, and the police officers drove away without making any

arrests. That is not sufficient evidence to deny Petitioner a

Bail Bondsman's License on the basis of criminal activity or

lack of high character.

24. Concerning the incident in 1980 in Texas, the only

direct evidence at the hearing was the statement by the

emergency medical technician that he had heard Mr. Schmidt state

that he had taken cocaine. No competent evidence was presented

at the hearing indicating Petitioner's possession of cocaine or

even the existence of cocaine and there was no corroboration of

the witness' testimony. Petitioner's statement, if true, does

not constitute commission of a crime. Such an admission

standing alone, as was the case here, cannot be used by itself

to establish that a crime was committed; there must be other

evidence to corroborate the statement.

25. Even if Petitioner had taken cocaine in 1980, the only

evidence presented by the Department at the hearing would

indicate that it was an isolated incident. Isolated unlawful

acts or isolated acts of indiscretion committed several years

ago do not necessarily establish bad moral character. Zemour,

Inc. v. State of Florida, Division of Beverage 347 So. 2d 1102

(Fla. 1st DCA 1977): Wash & Dry Vending Co. v. State of Florida,

Dept. Of Bus. Reg. , 429 So. 2d 790 (Fla. 3d DCA 1983); cf. , In

re Petition of Diez-Arguelles , 401 So. 2d 1347 (Fla. 1981).

This is particularly so when the Petitioner's witnesses and the

Department's own investigation reveal no character flaws or

indications of criminal activity within the last five years and

when the statute requires the assessment of character traits "at

the time of application." See Section 648.34(2).

26. Thus, there was insufficient evidence to prove the

Department's allegations of lack of high character and approved

integrity at the time Petitioner filed his application.

Further, because the Department failed to prove its allegations

of repeated criminal involvement and a continuing involvement

with persons identified with drug activity, the Department

failed to demonstrate Petitioner's lack of fitness or

trustworthiness to engage in the bail bond business.

27. That leaves the question of whether the "Not Guilty"

answer to Question 12 of the application (referring to the

nature of any criminal charges and its outcome) constitutes a

material misstatement, misrepresentation, or fraud such as to

allow the Department the ability to deny approval of the

application. The charge related to the incident in Texas and,

technically, the proper answer would have been "Conviction

Reversed," or perhaps more properly since it was the eventual

outcome, "Dismissed." The record shows that Petitioner made no

attempt whatsoever to hide or disguise the proceedings in Texas

and, in fact, he cooperated completely with the Department by

promptly obtaining certified records of all of the proceedings.

The proper outcome of the proceedings was known to the

Department prior to the time its first letter of denial was

issued and throughout the Departments evaluation of an

investigation of this application. The language "a material

misstatement of fact, misrepresentation, or fraud" in Chapter

648 has been directly construed and has been found to require

scienter, a knowing intentional act designed to deceive.

Grantham v. Department of Insurance, 5 FALR 2169-A, delivered

May 13, 1983. Because it cannot be shown that Petitioner

intended to deceive, good cause does not exist for denial of

Petitioner's application on the basis of the "Not Guilty"

answer. Further, the distinction between "Not Guilty" and

"Charges Dismissed" are technical at best, and are not material

in this context. The Department's assertion that In the matter

of Kenneth Earl West , 6 FALR 6510, delivered on April 19, 1984,

controls the result here is misplaced. West answered in the

negative to the question concerning convictions of felonies,

when in fact he had been charged with and pleaded guilty to two

felonies within the prior two months. It is clear that West's

statement were more substantive misstatements or

misrepresentations than Petitioner's "Not Guilty" answer, and

thus West's statements were more of a material nature.

28. In proceedings such as these, the applicant must prove

entitlement to the license sought or, as here, entitlement to

take the licensure examination. It is concluded that Petitioner

has proven that he meets the qualifications for the bail

bondsman's license as set forth in Section 648.34, Florida

Statutes. The Department has not proven that Petitioner

behavior and application are inconsistent with Section 648.45(b)

or (e). Petitioner has established his entitlement for

eligibility and licensing as a limited surety agent.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions

of Law, it is

RECOMMENDED that the Department of Insurance enter a Final

Order approving the application of Dennis J. Schmidt for

examination and licensure as a limited surety agent (bail

bondsman) and permitting Dennis J. Schmidt to sit for the

examination.

DONE and ORDERED this 23rd day of October, 1985, in

Tallahassee, Florida.

___________________________________

DIANE K. KIESLING

Hearing Officer

Division of Administrative Hearings

The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

[phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 23rd day of October, 1985.

APPENDIX

A. Petitioner's Proposed Findings of Fact

1. Adopted in substance (See Finding of Fact 1)

2. Adopted in substance (See Finding of Fact 2)

3. Adopted in substance (See Finding of Fact 3)

4. Rejected as conclusory and not supported by the evidence.

5. Adopted in substance (See Finding of Fact 6)

6. Adopted in substance (See Finding of Fact 9)

7. Adopted in substance (See Finding of Fact 11)

8. Adopted in substance (See Finding of Fact 11)

9. Adopted in substance (See Finding of Fact 12)

10. Rejected as irrelevant.

11. Rejected as irrelevant.

12. Rejected as irrelevant.

13. Adopted in substance (See Finding of Fact 7)

14. Rejected as irrelevant, argumentative, and not supported by

the evidence.

15. Adopted in substance (See Finding of Fact 10)

16. Rejected as conclusory, argumentative, going to the ultimate

issues.

B. Respondent's Proposed Findings of Fact

1. Adopted in substance (See Finding of Fact 1)

2. Adopted in substance (See Finding of Fact 4)

3. Adopted in substance (See Finding of Fact 4)

4. Rejected as not supported by the evidence

5. Adopted in substance (See Finding of Fact 5)

6. Adopted in substance (See Finding of Fact 1)

7. Adopted in substance (See Finding of Fact 7)

8. Rejected as irrelevant.

9. Adopted in substance (See Finding of Fact 7)

10. Adopted in substance (See Finding of Fact 5)

11. Adopted in substance (See Finding of Fact 8)

12. Adopted in substance (See Finding of Fact 6)

13. Adopted in substance (See Finding of Fact 10)

14. Adopted in substance (See Finding of Fact 10)

15. Adopted in substance (See Finding of Fact 9)

16. Adopted in substance (See Finding of Fact 9)

17. Adopted in substance (See Finding of Fact 9)

18. Adopted in substance (See Finding of Fact 9)

19. Adopted in substance (See Finding of Fact 1)

20. Adopted in substance (See Finding of Fact 2)

COPIES FURNISHED:

James C. Massie, Esquire

P. O. Box 10371

Tallahassee, Florida 32301

Richard W. Thornburg, Esquire

Department of Insurance

413-B Larson Building

Tallahassee, Florida 32301

Lealand McCharen, Esquire

Department of Insurance

413-B Larson Building

Tallahassee, Florida 32301

Dennis Silverman, Esquire

Department of Insurance

413-B Larson Building

Tallahassee, Florida 32301

Hon. William Gunter

State Treasurer and Insurance

Commissioner

The Capitol-Plaza Level

Tallahassee, Florida 32301